What was the amount of cash acquired by Caption By Hyatt in the Bahia Principe Transaction?
Caption_By_Hyatt Franchise · 2025 FDDAnswer from 2025 FDD Document
Three in the fair value hierarchy, are estimated using discounted future cash flow models. The principal inputs used are projected future cash flows and the discount rate, which is generally the effective interest rate of the loan.
7. ACQUISITIONS AND DISPOSITIONS
Acquisitions
Bahia Principe—During the year ended December 31, 2024, we completed the Bahia Principe Transaction (see Note 4) for €419 million of base consideration, subject to customary adjustments related to working capital, cash, and indebtedness, and including €60 million of deferred consideration payable at future dates. We may pay additional variable contingent consideration through 2034 primarily related to the achievement of certain milestones for the development of additional hotels to be managed by the joint venture. The contingent consideration is payable at each hotel opening and is based on a multiple of stabilized base and incentive management fee revenues, and therefore, we are unable to reasonably estimate our maximum potential future consideration.
We closed on the transaction on December 27, 2024, paid cash of €359 million (approximately $374 million) and accounted for the transaction as a business combination as we are the primary beneficiary of the VIE (see Note 4). Upon acquisition, we recorded a $58 million deferred consideration liability at fair value, of which $20 million is recorded in accrued expenses and other current liabilities and $38 million is recorded in other long-term liabilities on our consolidated balance sheet. The fair value was estimated using a discounted future cash flow model and includes assumptions and judgments regarding the discount rate, which is primarily a Level Three assumption. We also recorded a $33 million contingent consideration liability at fair value in other long-term liabilities on our consolidated balance sheet. The fair value was estimated using a discounted future cash flow model and includes assumptions and judgments regarding the discount rate, estimated probability of achieving the hotel development milestones, and expected amount and timing of payments, which are primarily Level Three assumptions. Total purchase consideration was determined as follows:
| Cash paid, net of cash acquired | $ 372 |
|---|---|
| Cash acquired | 2 |
| Fair value of deferred consideration | 58 |
| Fair value of contingent consideration | 33 |
| Total purchase consideration | $ 465 |
The acquisition includes management and hotel services agreements for operating hotels and the Bahia Principe trade name. In addition, the acquisition contemplates the future management of undeveloped Bahia Principe Hotels & Resortsbranded properties. For the period from the acquisition date through December 31, 2024, total revenues and net income attributable to Bahia Principe were insignificant.
Source: Item 21 — Financial Statements (FDD pages 84–85)
What This Means (2025 FDD)
According to Caption By Hyatt's 2025 Franchise Disclosure Document, the company did not acquire cash in the Bahia Principe Transaction. Instead, Caption By Hyatt paid cash of €359 million (approximately $374 million) as part of the transaction. The total consideration for the Bahia Principe Transaction was €419 million, subject to adjustments for working capital, cash, and indebtedness, and included €60 million of deferred consideration payable at future dates.
Caption By Hyatt accounted for the transaction as a business combination because it is the primary beneficiary of the VIE (Variable Interest Entity). Upon acquisition, Caption By Hyatt recorded a $58 million deferred consideration liability at fair value, with $20 million in accrued expenses and other current liabilities and $38 million in other long-term liabilities. Additionally, a $33 million contingent consideration liability at fair value was recorded in other long-term liabilities.
In a separate transaction, the Alua Portfolio acquisition, Caption By Hyatt acquired $4 million of cash. This transaction involved the asset acquisition of Alua Atlántico Golf Resort, Alua Tenerife, and AluaSoul Orotava Valley through a locked box structure. The enterprise value for this acquisition was €117 million, subject to adjustments related to indebtedness and net working capital. At closing, Caption By Hyatt paid €61 million of cash (approximately $65 million).
It is important for a prospective Caption By Hyatt franchisee to understand the financial implications of these transactions, as they reflect the company's investment strategies and financial obligations. While the Bahia Principe Transaction involved a significant cash outlay, the Alua Portfolio acquisition resulted in a small amount of cash being acquired by Caption By Hyatt.